Avatar: The Way of Water must become one of the top four highest-grossing movies of all...

midian182

Posts: 8,303   +103
Staff member
In brief: Are you excited about Avatar: The Way of Water, the upcoming sequel to 2009's Avatar? Director James Cameron hopes so, given that it needs to become one of the top four highest-grossing movies of all time just to break even.

Avatar: The Way of Water will arrive with plenty of expectations. The first entry in the series remains the most successful movie of all time, having made $2.9 billion at the box office from its original release and subsequent re-releases. The sequel has a reported production budget somewhere in the $250 million range. Cameron has never said an exact figure, though he did tell GQ that it was "very f***ing [expensive]."

Cameron also revealed he told Disney and 20th Century Studios that the sequel represented "the worst business case in movie history." The director believes "you have to be the third or fourth highest-grossing film in history. That's your threshold. That's your break even."

Sitting behind Avatar on the list of top-grossing movies (unadjusted for inflation) worldwide is Disney's Avengers: Endgame in second position with $2.7 million. Cameron's Titanic is third with $2.1 billion, followed by Star Wars: The Force Awakens ($2.07 billion), then Avengers: Infinity War ($2.05 billion)—the five movies are the only ones ever to cross the $2 billion milestone.

It'll be interesting to see how well The Way of Water performs, given that many people rushed to see the original based solely on the then-revolutionary 3D viewing experience it offered at the time—an estimated 72% of Avatar's takings came from 3D screens.

The Way of Water, also in 3D, utilizes several cutting-edge filmmaking technologies, including new cameras for underwater shooting, AIs, and algorithms, which should make it a visually impressive movie.

Cinema attendance has been down since the start of the pandemic—Cineworld, the world's second-largest movie theatre operator behind AMC Entertainment, filed for bankruptcy in September. But it's not impossible for a new movie to generate more than $2 billion; Spider-Man: No Way Home came very close with its $1.9 billion.

Cameron plans on making three more Avatars after Way of Water. Expect all of them to have equally large budgets.

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Neatfeatguy

Posts: 1,006   +1,837
I didn't find Avatar very good. It looked good, but I felt the story was a bit clunky and boring. I also thought the ending was very anti-climatic. I found it hard to make a connection with the humans or the indigenous people on Avatar, but that's probably because the story was meh.

I have no interest in seeing a second movie, let alone a third one that may be coming out, too.
 

Rocky4040

Posts: 126   +159
If my memory serves me right there are 3 more Avatar movies maybe it was 4 more movies and they made them all at once which is why it took so long to get the next movie out and probably why they need to have such high margins. Looks like Camren just gave the budget for the next movie in line though. Of coarse they will release the next finished movie probably every couple of years so they can milk as much out of each movie.
 

yRaz

Posts: 4,783   +5,961
I was like 20ish whenever I saw it in 3D and absolutely loved it. I loved it for more reasons than I care to type out on my phone. I didn't see any of the political crap about it until weeks after my first viewing. Everytime I make an upgrade to my home theater it's the first thing I watch. I've been waiting for this release for years.
 

Uncle Al

Posts: 9,276   +8,442
Sounds like click-bait of just plain fluff to me. While $250M is nothing to sneeze at, it's hardly the largest budget for a movie. Sounds to me like they may have made just a medium movie and hoping all the hype will carry over to the box office .....
 

Theinsanegamer

Posts: 3,740   +6,498
Had this come out a few years after avatar 1 I could see it.

Now though? We've had time to realize that avatar was some very pretty scenery blasted onto the same old tired pocahontas/trail of tears story, with 1 dimensional characters chewing scenery and no character development. Watching it today, its just so.....boring.

Of course, what do I know? Cheap Slop seems to sell great these days, maybe this'll become the best selling flick of all time and pave the way forward for dozens of films aping the same story, pushing pretty scenery over actual storytelling. It worked for video games after all.
 

wiyosaya

Posts: 8,234   +7,575
I was like 20ish whenever I saw it in 3D and absolutely loved it. I loved it for more reasons than I care to type out on my phone. I didn't see any of the political crap about it until weeks after my first viewing. Everytime I make an upgrade to my home theater it's the first thing I watch. I've been waiting for this release for years.
Right there with you. I won't however, see it in the theater. My wife and I no longer go to the theaters since the experience is almost always ruined by people on their cell phones, etc.

I saw the first move in an IMAX theater in 3D, and thought the 3D added very little to it, so 3D is not a draw either, besides, I'm not a fan of IMAX sound systems.

I'm not a fan of 3D movies. Not because I don't like the technology, but because every time I've seen a 3D movie at the theaters it's been way too dark and out of focus - every time.
From my understanding, that is the "fault" of the individual theater's projectionist. Apparently, not many projectionists understand that they have the ability to turn up the brightness to a reasonable level on 3D movies (at least), and thus they do not turn up the brightness which ruins the experience for theater goers. Also, from what I understand, it would not be a problem in a "Dolby Cinema" however, in the US at least, there are very few of them.
 

Theinsanegamer

Posts: 3,740   +6,498
Not following how a movie with a $250M budget needs to make $2B to break even.
(Or is that budget a typo in the article?)
You gotta remember, this is Hollywood Mouse tier accounting.

So, that $250m budget. Lets say that was the actual shooting budget for simplicity. Next, you have marketing, which general rule of thumb is at least as much, so that's another $250 million. Then you have reshoots, this can vary wildly, one of the worst was the rise of skywalker which had a rumored $200m in reshoots, nearly as much as the main budget. We'll assume, wiith benefit of the doubt, that cameron can still do his job and this wasnt as necessary, so figure roughly 20% total budget, or another $50 million.

So now, that $250m budget is actually closer to $550m. Now we have the box office. Depending on the market the take home from theaters varies, with it being over 50% in richer nations and closer to 25% in poorer ones, typically around 35-45% of box office revenue goes to theaters. Let's say they hit the $2bn they want. Take 40% of that for theaters, and the take home for the studio drops to $1.2 bn. Then you have to pay taxes on that $1.2bn, ain the UK it's a 20% tax, in india it scales between 5% and 50%. You have distribution fees and sales agent fees as well. the typical estimate is somewhere around 60% of the original box office is lost. So now that $2bn total is actually only $800m.

Now, we have to subtract the budget, which we now estimate to be about $550 million, and you are left with only $250 million. Now we have to pay investors, and my guess is this is the rub for profitability, cameron's reputation likely led to many investors demanding higher percentage returns then normal, which may be eating the remaining profit. Usually they get about half of the remaining, so $125 million, but they may be demanding more, like say $200 mil or so, necessitating those massive box office returns, and you can see why cameron is saying his $250m film needs to make $2bn to break even.

Hollywood accounting, ladies and gentlemen.
 

human7

Posts: 124   +96
I didn't find Avatar very good. It looked good, but I felt the story was a bit clunky and boring. I also thought the ending was very anti-climatic. I found it hard to make a connection with the humans or the indigenous people on Avatar, but that's probably because the story was meh.

I have no interest in seeing a second movie, let alone a third one that may be coming out, too.
Indeed, the visuals were what made this movie what it is. I liked the story, but didn't find it to be particularly amazing. Still, it was made as a single movie, and I've learned that the best writing and character development don't happen in movies because they are too short. Since they are planning 3 or 4 sequels all at once, maybe we will get better character arcs and writing. Or maybe not.

Either way I'm excited to see it, but my expectations will be around the visuals, not the story. I am most interested to see how the underwater scenes look, as the technology developments to enable that was the cause for most of the delay in releasing this film.
 
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human7

Posts: 124   +96
Sounds like click-bait of just plain fluff to me. While $250M is nothing to sneeze at, it's hardly the largest budget for a movie. Sounds to me like they may have made just a medium movie and hoping all the hype will carry over to the box office .....
On Wikipedia the budget is listed as $350-400 million. If it's closer to $400 million, it could be the most expensive film ever made, but it would have to surpass $450 million when adjusted for inflation to claim that title. Interestingly, Pirates of the Caribbean: On Stranger Tides holds the record. That's not a film I would've considered the most expensive if I were guessing.
 
Not following how a movie with a $250M budget needs to make $2B to break even.
(Or is that budget a typo in the article?)

I think that budget number is low, but it's still workable.

Let's say the $250m represents just the production budget. Movies will usually spend the same amount on marketing, so we're at $500m all in between production and marketing.

Studios usually receive about 60% of the ticket sales from a movie (although Disney is known for taking up to 90% of the ticket sales). Let's take that low number of 60%. At a $500m total budget, Avatar 2, with the studio taking 60% of the revenues, would have to clear $900m-$1bn domestically just to make back the budget. That domestic part is important, because the highest grossing domestic film of all-time (without adjusting for inflation) is The Force Awakens at just under $940m, which tracks with Cameron's claim of having to be in the top 4 just to break even. I bring up the domestic part because the revenue split with foreign showings can get really messy and is usually in favor of the foreign distributor (for example, China only pays 25% of the box office gross back to the American studios, a far cry of the 60-90% they tend to get domestically). So, at that low budget number, considering domestic and foreign sales (and the first Avatar did really well worldwide, but is only ranked 4th in domestic box office), it can be similar in revenue numbers to No Way Home or The Force Awakens and be in the black.

Those numbers I provided are assuming the production budget is "only" $250m, but I imagine its significantly higher given the long production time and new techniques he's used. So, realistically, we'd be looking at a movie with a total budget (again, production and marketing) of closer to $600-$800m. At those numbers, just to break even, it would undoubtedly have to be in the top 4 highest grossing films to break even, because that worldwide revenue split isn't in their favor and there's no guarantee that Avatar 2 is gonna be as popular as the first, especially when you consider that the original was released well before the MCU and DCEU became cultural juggernauts (and, essentially, the only type of movies that crack a billion that aren't one-off megahits like Top Gun: Maverick, or long-running series like the Jurassic World series, or the The Fast and the Furious series).